Real Estate Investing

According to Entrepreneur contributor Mark J. Kohler, real estate offers several benefits that can help investors earn sizable returns while keeping their taxes down. Property investors often find that they can gain more leverage, real estate offers tax-free cash flow, and you may be able to write off some expenses against other forms of income to keep tax burdens low.

This shows that investors should take a serious look at residential and commercial real estate opportunities. But to make the most out of these opportunities, property investors should learn details about the industry.

Finding Investors for Residential and Commercial Property

Purchasing a large area of land can cost a lot of money. High prices can make it difficult for investors to commit to opportunities that will likely yield significant returns.

Instead of letting an investment opportunity slip by, it’s possible to recruit other investors to bring the price per person more affordable. There are several effective strategies that could help you find land investors for residential and commercial projects.

Real Estate Investor Clubs

Many investors start by contacting real estate investors clubs. Most major cities have investment clubs that can help people connect with each other. You can also visit club websites to meet other people interested in real estate investments. The San Francisco Gate mentions REI Club, National REIA, and Bigger Pockets are good resources. The more involved you get with the forums on each website, the more connections you can make with local and national investors.

Real estate investment clubs also host meetings in real life. It’s pertinent to attend these meetings. Stay late so you can rub shoulders with some of your area’s most influential property investors. Even if they don’t want to contribute money, they might be able to point you towards someone who is interested.

Real Estate Agents

Real estate agents in your area are probably familiar with property investors. Some of the investors, in fact, work as real estate agents so they can get the best deals on properties that have just gone on the market.

If you know someone who works as a real estate agent, pick his or her brain for contacts who might want to invest property that interests you. An experienced real estate agent will know what types of properties investors focus on. They may also know what kind of experiences people have working with these investors. If an investor sounds hard to work with, you may want to pursue other options.

Lead Generation

If you’re serious about property investment, you’ll eventually want to learn about lead generation. This includes a variety of strategies that will give you the contact information of people interested in real estate investments.

You can generate leads by posting an ad in your local newspaper, Craigslist, and other popular forums. You may also want to build a website that offers an overview of your investment options and encourages qualified investors to introduce themselves. If you’re ready to commit a little more time, set up conferences and meetings with investment groups in your region. You can then collect the contact information of people who show some interest in your ideas.

Effective lead generation sources need time to develop and start producing results. If you don’t have the time to invest into a lead generation strategy, purchasing a list of investors can save a lot of time and effort. A smart move would be to create a few lead generation tools and then purchase a list of real estate investor leads to use while your tools start gaining traction.

Investing in Developed and Undeveloped Land

Investing in undeveloped land often leads to higher returns. However, land investors should realize that undeveloped or “raw” land presents more risks. Those who purchase undeveloped land rarely see quick returns on their investments. It may take years for development plans to earn municipal approval. Construction costs can also make developing the land very expensive.

Undeveloped land is only a good option for property investors who can afford to keep their money tied up for several years. Since it’s also possible that land use will change during this time, investors may find that their property becomes less desirable by the time they can build on it and sell it to homebuyers or businesses.

Most developed land requires a larger up-front investment, but investors can start collecting returns almost immediately, especially if they choose property in booming areas. Those with significant capital who want a quick return on their investments should consider developed land.

Interest in Farmland Investment is Up

Farmland investors have had a good decade. According to data from the National Council of Real Estate Investment Fiduciaries, farmland investments have consistently offered higher returns than stock market investments. During 2005 Q4, investors saw a 22.78% return. That’s an exceptional rate that even some of the world’s top hedge funds cannot match.

Residential and Commercial Property Investments

Several factors can affect whether property investors want to devote money to residential or commercial property investments. One isn’t necessarily better than the other. But one option will likely meet the needs of certain investors while the other appeals to a different kind of investor.

According to David V. Tran, a CEO at eFunding, most people get started in residential property investments. Residential property usually costs less than commercial property. This makes it easier for people to invest in property even if they don’t have a lot of money set aside. As their money grows, though, they’re likely to shift towards commercial properties.

Commercial real estate usually requires a bigger investment, but the payoffs are often larger.

Commercial real estate really comes out ahead when investors choose to rent property instead of selling it. Tenants who rent commercial properties are less likely to move after a year or two. They’re often willing to sign multi-year leases that offer a steady return on investment. It’s also easier to manage several business tenants operating in the same building than it is to manage several residential tenants living in different buildings.

If investors have enough capital, commercial property usually offers a better return with less work.

Property investors have several unique options when choosing opportunities that could help them earn large returns. If you want to investment in a certain type of property, focus on recruiting investors who are most likely to find the opportunity interesting and affordable. Otherwise, it’s possible to waste a lot of time talking to the wrong people.